Iran raid likely to drag in US, hurt global economy

MUNICH | By William Maclean

A Russian technician works in the control room at the nuclear power plant in Bushehr 1200 kilometers south of Tehran February 25, 2009.

Reuters/Caren Firouz/Files

MUNICH (Reuters) - An Israeli raid on Iran's nuclear facilities would deliver a painful shock to the global economy, revive flagging Islamist militancy and possibly drag the United States into a regional war whether it backed its ally's attack or not.

As if that prospect was not alarming enough, any doubts Tehran entertained about the wisdom of building a nuclear weapon would vanish the moment the strike occurred.

These longstanding U.S. and European assumptions about the consequences of an Israeli attack on Iran are being re-examined with greater urgency in Western capitals after repeated warnings by Israel that the chance of a peaceful resolution may be closing.

There is concern that Israel may attack in coming months to disrupt the transfer of parts of Iran's nuclear development work to an underground site south of Tehran that may be invulnerable to conventional bombing.

Western experts want Israel to think long and hard before embarking on a raid many suspect would spark a broader conflict.

"Whoever attacks Iran's nuclear infrastructure is really making the decision to go to war with Iran," Richard Burt, a former chief U.S. negotiator at strategic arms reduction talks, told Reuters on the sidelines of the Munich Security Conference.

"We are talking about a range of great uncertainties, all of them basically negative, so this is one reason why consistently the joint chiefs of staff of the uniformed military in the U.S. do not like the idea of attacking Iran."

Analysts detect a growing gap between Israeli and Western views on using force against Tehran's nuclear programme, which Tehran says is purely for peaceful purposes but the West suspects is aimed at acquiring a nuclear weapons capability.

The New York Times recently reported that Israeli leaders, based on intelligence estimates and academic studies, had taken the view that an Israeli attack on Iranian nuclear installations would not produce such catastrophic events as regional war, widespread attacks by militants and massive oil price rises.

The newspaper said that Israeli leaders and agencies believe that Iran's threats to retaliate against Israeli and Western targets if attacked were "overblown" and partly bluff.

Asked to spell out the consequences of a strike, Israeli Deputy Foreign Minister Danny Ayalon said that he not want to explore a hypothetical question, arguing any risks "would be dwarfed in comparison to the danger of a nuclear Iran".

"One thing is clear," he told Reuters. "If Iran becomes nuclear then it's the end of world order as we know it ... This is what we have to think about, and not about what will happen in case some action is being taken.

U.S. newspaper The Washington Post reported last week that Defense Secretary Leon Panetta believed Israel was likely to bomb Iran within months to stop it building a nuclear bomb.

Panetta declined to comment. But his alleged remarks and other Obama administration statements indicate the White House is focused on dissuading Israel from taking action - and distancing itself from an Israeli strike if persuasion fails.

The consequences of an Israeli attack would be wide-ranging and destabilising.

IRAN EXPELS NUCLEAR INSPECTORS, QUITS TREATY

Iran would expel International Atomic Energy Agency inspectors and quit the Nuclear Non-Proliferation Treaty, ending any possibility of a negotiated solution to the nuclear issue.

"There is not a country on Earth that is going to blame them for doing that, they are all going to blame Israel. Once Iran is out of the NPT, the sanctions are gone," Ken Pollack, director of the Saban Center for Middle East Policy at the Brookings Institution, told Reuters.

Leaving the NPT would disrupt the sanctions regime since its measures are predicated upon enforcing treaty compliance.

IRAN DECIDES TO GO FOR THE BOMB

Experts say a raid would only delay, not destroy Iran's programme. And once it had recovered, Iran would probably seek to develop nuclear weapons. Jon Alterman, director of the Middle East program at Washington's Center for International and Strategic Studies, told Reuters Iran would redouble "efforts to develop a deterrent so it never happens again."

OIL PRICES SOAR, JOLT FINANCIAL MARKETS

A strike on Iran and Iran's response, including attempts to close the Strait of Hormuz, which is vital for oil shipments, or an attack on Saudi oilfields, would lead to a sharp rise in oil prices that could seriously harm the U.S. economy, jeopardizing President Barack Obama's chances for re-election.

Saudi Arabia would be forced to use all its spare output capacity, a crucial safety cushion for oil markets.

But the most serious fears debated at oil trading desks include the possibility of Iran mining the straits, attacking ships as it did during the Iran-Iraq war, or challenging the legality of the passage of some vessels through its territorial waters.

In the event of a big stoppage the consuming nations' International Energy Agency would very likely release emergency government stocks to tame prices, as it did in June last year when Libyan output was lost.

Israel's Ayalon argues that a nuclear-armed Iran would pose a greater threat to the oil market as it could dictate prices. "It will be the end of the free flow of oil from the Gulf."

IRAN HITS BACK IN THE GULF, LEVANT, POSSIBLY ASIA

Tehran has warned several times it may seal off the Strait of Hormuz, choking the supply of Gulf crude and gas, if attacked or if sanctions mean it cannot export its oil.

But many experts say Iran's leaders will be looking for ways to harass enemies and cause disruption while falling short of triggering massive U.S.-led retaliation.

Possible Iranian actions could include harrying tanker traffic in the Gulf with fast attack boats, seizing uninhabited Gulf islands claimed by other states or grabbing hostages from passing civilian or military ships, stoking trouble in Sunni Muslim-ruled Arab states with restive Shi'ite Muslim communities and orchestrating attacks on U.S. forces in Afghanistan or elsewhere using militant "proxies" such as Hezbollah.

If the Iranian government interprets the strike as a fully-fledged attempt at regime change, it might adopt a more muscular response could include ballistic-missile salvos on civilian and military targets in the Gulf.

US GETS SUCKED IN, MAY ITSELF BECOME TARGET

Obama also would likely come under intense domestic pressure to back Israel's actions and come to Israel's defence if Iran succeeds in landing missile attacks on Israel's territory.

In a 2009 study for the Council on Foreign Relations, Middle East analyst Steve Simon, who is now Senior Director for the Middle East and North Africa at the U.S. National Security Council, says that the United States would probably become embroiled militarily in any Iranian retaliation against Israel or other countries in the region.

Experts say Israel alone does not have the firepower to kill off Iran's nuclear programme and any U.S. help in that effort would therefore be very welcome. A study by former senior British intelligence official said the "The US would be assumed complicit, and would become embroiled in defending Israel against a counter-attack. This would stretch the U.S. military."

STRAIN IN ISRAELI-WESTERN TIES

In November, the top U.S. military officer told Reuters he did not know whether Israel would alert the United States ahead of time if it decided to take military action against Iran.

General Martin Dempsey, chairman of the Joint Chiefs of Staff, also acknowledged differences in perspective between the United States and Israel over the best way to handle Iran.

In an indication of a divergence in Israeli and Western views, a senior former British intelligence official wrote in a private analysis in 2011 that the West had two objectives: prevent the Iranian bomb, and also "prevent Iran being bombed".

"Both outcomes would be potentially disastrous for our national security," he wrote.

Referring to a strike, he went on, "the likely damage (to Iran's programme) would outweigh the benefits."

"There would be problems between the U.S. and Israel, �and probably tensions between the U.S. and European allies as well."

U.S. POSITION IN THE MIDDLE EAST CONSTRAINED

Simon's CFR study states that since the United States would be viewed as having assisted Israel, U.S. efforts to foster better relations with Muslims would almost certainly suffer.

Anti-U.S. sentiment would be inflamed in Muslim countries, especially Syria, Lebanon and the Palestinian Territories. Hamas and Hezbollah would be likely to intensify attacks making a Middle East settlement even more unlikely.

"If the Israelis think they can attack Iran and remain immune they are living in a fools' paradise," said Farhang Jahanpour of the Oxford University Faculty of Oriental Studies.

He said a raid would create "huge anti-Israeli feeling" and an "Islamic backlash" in the region.

Former U.S. National Security Adviser Zbigniew Brzezinski said in a January interview with The Real News website a strike would be a "disaster for us more than for Israel in the short run, and a fundamental disaster for Israel in the long run."

Neither the Russians or Europeans would side with America in any resulting conflict. He said that the United States could be "forced out of the region", a development he suggested would imperil Israel's existence.

WILL IRANIANS RALLY TO THEIR GOVERNMENT?

A RAND Corporation report in 2011 noted that the use or threat of force to compel Iran to halt its nuclear programme would probably strengthen domestic support for the government.

But an analyst in Iran who asked not to be identified as the subject was sensitive said he doubted whether there would be an uptick in popularity for the government, as there was during the country's war with Iraq in the 1980s.

"The Iran-Iraq wartime public allegiance to the regime has diminished because of various factors. Public dissatisfaction is on increase over failing economy, hostile foreign policy and political infighting among the elites," said the analyst.

Michael Axworthy, director of the Centre for Persian and Iranian Studies at Britain's Exeter University, told Reuters that while Iranians might not rally to their rulers, they would tend to "go along with the statements that are produced".

"This is a regime that expects to be isolated and to some extent thrives on isolation," he said.

POSSIBLE SPUR TO PROLIFERATION BY OTHERS

Former U.S. negotiator Burt said some aspirant nuclear weapons powers might respond to a strike on Iran by redoubling efforts to get the bomb as a deterrent. But it was difficult to generalize and not all countries would take that view.

Ayalon said it would be the emergence of a nuclear-armed Iran that would be the real spur to proliferation. (Additional reporting by Peter Apps in London, Andrew Quinn, Mark Hosenball, Tabassum Zakaria in Washington)

(Reporting by William Maclean)

Trending On Reuters

Markets

The BSE Sensex posted its worst monthly fall in more than two years, raising concerns a strong rally that saw indexes surge in the fiscal year was waning due to concerns about stock valuations and a more gradual economic growth. Full Article